Do These Regulations Make My Fuel Look Fat?

The bullying from Big Oil won't stop until the industry says "enough," writes Ron Lamberty, in a column about E15 and what gas station owners think of the fuel.

By Ron Lamberty | May 16, 2014

So, what’s the deal with E15? Why aren’t more stations putting it in? It’s higher octane and almost always costs less than “regular” gasoline and E10 and it can be used in about three-quarters of the cars on the road today. Equipment-wise, the cost to add E15 is between zero and not very much, even if your local fire marshall requires an upgrade to make pumps compatible up to E25. That costs a few thousand bucks for small stations. Not insignificant, but a far cry from the $300,000 cost that the oil industry public relation hacks have been using to scare stations away.

There is some paperwork required to legally sell E15— station owners just have to send a letter to the U.S. EPA and sign up for a fuel survey—and there are plenty of folks that want to help with that process. Free EPA-required orange labels and “minimum purchase” stickers are available at no charge from several sources and the fuel survey program costs retailers either a hundred bucks a year or nothing. Plus, every station’s fuel will be tested by that organization anyway, whether they sell E15 or not.

E15 has one less major hurdle than E10 faced in getting into markets nationwide, ethanol availability. Seven years ago, some fuel marketers who “got it” and loved the idea of lower cost, ethanol-enriched, higher-octane gas, couldn’t offer it to their customers because no ethanol was available in their market. With ethanol now stored in pipeline terminals from coast to coast, retailers just have to add a little bit more of the stuff that’s already there to make E10 into E15.

Retailers can even make extra money in the renewable identification numbers (RINs) market, even if they’re only getting credits for the extra 5 percent ethanol that goes into E15. The big oil companies have basically banned it from stations that carry their brand, so an independent who adds E15 to his or her product mix can gain a rare advantage by offering a lower cost, higher octane fuel that the big guys won’t be selling for a while. And, then they can sell their RINs to the oil companies and pocket some of the extra cash, while using the rest to lower E15 costs and retail prices.

So, why aren’t more retailers offering E15? Don’t they like us? Don’t they think our fuel is attractive?Well, actually, talking to station owners on the c-store trade show circuit, it seems station owners don’t seem to think E15 is unattractive. But they do think it’s too “high maintenance.”

Adding E15 at little or no cost is nice, but it’s a hassle to get permission from regulators who have never said a word when stations switched fuels in the past. EPA’s registration process is simple but not as simple as doing nothing, which is what they had to do to switch to suboctane. Labeling is easy and free but other fuels require no warning labels. Fuel terminals have the components for E15 but won’t set up a product code for it. And, when you make your own E15, the gas and ethanol have to come from companies who say it’s OK to use it for E15 and you have to keep the paperwork to prove it. Imagine if marketers had to do the same when blending No. 1 and No. 2 diesel in the winter.

Plus, several marketers say Reid vapor pressure (RVP) regulations are just too big a hassle. Changing the pumps from regular to flex fuel and back every spring and fall is a pain, and frankly, makes no sense to most station owners. “How can it be legal on May 31, and illegal the next day?” one of them asked me. “That’s just dumb.”

And that’s the real problem. E15 got its high-maintenance reputation by answering the taunts of the bully fuel in the marketplace, hoping it would leave ethanol alone when it passed their tests. They won’t. Big Oil will keep pushing EPA and Congress to make ethanol meet standards oil never has to meet and the bullying won’t stop until we say “enough.” A punch in the nose might help, too.